A Courtside Seat for Asia-Pacific Trade

March 15th, 2013

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When it comes to sports–and trade–there’s no substitute for being there.

Earlier this month, I attended the very last regular season Big East men’s basketball game between Georgetown and Syracuse. I’m sure that ESPN’s wall-to-wall broadcast of the game was spectacular in all its HD glory. But nothing can beat actually being there–hearing the chants, watching legends like Patrick Ewing high five the fans, and seeing subtleties in the game that television simply can’t capture.

I recently had a similar experience when I traveled to New Zealand to talk about the trade opportunities in the Asia-Pacific and, specifically, the Trans-Pacific Partnership (TPP) trade negotiations. After over 25 meetings with government officials, negotiators, trade thinkers, and business representatives, I returned home with a much fuller and more nuanced appreciation of the opportunities and challenges for trade in the greater East Asian region.

In particular, four things stood out in my discussions with resident experts and thoughtful observers in the region:

First, people repeatedly remarked about the vital role the TPP can play in establishing strong and fair trade rules in the entire region–not just among the current group of 11 negotiating countries. Every country in the region is closely following the progress of the TPP talks, and a number are seriously considering joining the negotiations.

The TPP talks are also influencing countries–like China–that will likely take years to sign on to a high-standard regional trade deal. A number of New Zealand’s experts on China and regional trade stressed that China’s government and its academic institutions are obsessively following the TPP’s progress. And they noted that some key thought leaders in China appear to be more open to eventual trade reform than China’s official posture suggests.

Second, a comprehensive, high-standard TPP deal is still at risk if the negotiating countries remain too focused on carving out products or sectors for protection or special treatment­–whether it’s regulations or IP rules in Asia and Oceana, dairy in Canada, textiles in the United States, or state enterprises in Vietnam. With 11 countries participating in the TPP talks, trade observers stressed that the TPP’s benefits could quickly be eroded if countries cling too stubbornly to excluding their sensitive sectors. Rather than carve outs or exclusions, observers urged that negotiators should focus on trade-enhancing solutions, like longer tariff phase-outs for especially sensitive products.

Third, while the TPP is vitally important, it’s not the only game in town. There are currently extensive talks in the region aimed at adding to the already impressive number of trade agreements that span greater East Asia. Australia and New Zealand, for example, already have a high-standard free trade agreement with the 10 member countries of the Association of Southeast Asian Nations (ASEAN). They’re urging that progressive elements of that trade deal be included in the new Regional Comprehensive Economic Partnership (RCEP) trade deal that they and ASEAN are negotiating with China, India, Japan and Korea. These and other discussions could help drive progress toward stronger and fairer trade rules for the region. At the same time, all this activity means that countries that don’t actively participate in the process of better integrating Asia-Pacific trade will find it harder to compete for trade in the region.

Fourth, the TPP has significant potential to boost trade through its focus on specific issues–like small business trade–that cut across the TPP’s different chapters. Because of New Zealand’s small size and geographic isolation, its many small and medium enterprises (SMEs) must often seek economic opportunities abroad. In recent years, many New Zealand SMEs have had increasing success using the Internet and express delivery firms to sell their products to the world. The TPP’s ongoing focus on SME trade as a “cross-cutting” issue means that many key provisions of the deal–from origin rules to trade facilitation and regulatory coherence and supply chains–are being scrubbed to make them friendlier to small exporters, including America’s many SMEs.

In today’s digital world, a couch can be a courtside seat to a sold-out game. And a desktop computer can provide reams of data and studies on international trade. But sometimes, to fully experience both, it’s important to be there.